PE investments in real estate expected to be at $6.5bn in 2019

BENGALURU: Investments into real estate is expected to be about $ 6.5 billion, with office investments garnering the highest share. Investors, both foreign and Indian, are buoyed by the commercial office sector, which is witnessing robust office demand, said a recent report by RICS-Colliers. Investors are looking to bundle up assets and list them as REITs, capitalising on the solid demand.
“The next decade will usher in new formats of workplaces, with landlords emerging as wellness creators, where occupiers amalgamate workplaces and technology to increase productivity at workplaces”, says Ritesh SachdevMRICS, Head of Occupier Services, India and Managing Director, South India at Colliers International.

Additionally, office sector has been on a strong footing as compared to residential. Between 2019-2023, average annual gross absorption of 50.3 million sq ft is expected across top cities, outpacing the annual average gross absorption of the preceding five-year period by about 18%, mentioned the report.

“The Indian market is in the midst of a slowdown, with the residential sector most impacted. While we don’t have a full-blown recession currently, as we did back in 2008, the impact on the CRE market though not currently felt, will only be determined on how deep the slowdown spreads”, says Nimish Gupta FRICS, Managing Director, South Asia, RICS.

The new supply projection of 160-180 million sq ft over 2019-2021 is further expected to support investors’ appetite, who are faced with a lack of investible assets in cities like Bengaluru and Hyderabad, mentioned the joint report.

Since 2008, private-equity (PE) players have pumped nearly $56 billion into real estate, with domestic investors accounting for 57% of the inflows. Over the last five years, foreign investors have been focused on commercial office assets. Between 2014-H1 2019, Colliers notes that foreign investors accounted for 70.0% of total office investments.